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Author: 


Electric  Bond  and  Share 
Company 

Title: 

The  commercial 
development  of  the... 

Place: 

[n.p.] 

Date: 

1911 


MASTER  NEGATIVE  « 


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The  G>inmercial  Development 


of  the 


Electric  Light  and  Power  Industry 


Presented  with  the  Compliments 

of  the 

Electric  Bond  and  Share  Company 


€  -  -      »  .  » 

»    .  •  •   «  c        •« 


Prepared  by 
Edward  B.  Lee.  Statiatidan  for  the  Electric  Bond  and  Share  Company 

June  1.  1911 


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This  pamphlet  was  presented  to  the  members  of  the  National  Electric  Light 
Association  on  the  occasion  of  the  Annual  Convention,  held  in  New  York  City, 
May  29  to  June  2,  1911. 

ELECTRIC  BOND  AND  SHARE  COMPANY. 


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The  G>inmercial  Development  of  the  Electric  Light 

and  Power  Industry 


During  the  period  extending  from  the  days  of  youth  of  most  readers 
of  this  pamphlet  to  the  present  time  there  have  been  the  greatest  achieve- 
ments ever  known  in  the  electrical  field.  The  last  half  century  has  wit- 
nessed the  birth  of  the  telephone,  the  perfection  of  the  telegraph,  the  dis- 
covery of  the  arc  and  incandescent  lamps,  the  innovation  of  the  alternating 
current,  the  inventions  of  the  many  devices  of  the  central  electric  station, 
the  inauguration  of  electric  street  railroads,  the  discovery  of  wireless 
telegraphy,  the  use  of  the  electric  ignition  spark,  making  possible  the 
automobile,  flying  machine  and  motor  boat,  and  the  application  in  dozens 
of  other  ways  of  the  force  of  electricity. 

No  other  influence  has  ever  exerted  such  power  on  industrial  life 
as  that  brought  into  existence  by  these  discoveries  and  inventions  in 
electricity.  In  fact,  our  whole  industrial  life  has  been  made  over  by 
the  electrical  development  of  this  period.  The  industrial  changes  are 
still  going  on  and  will  become  even  more  pronounced  with  the  cheapen- 
ing of  electrical  energy  through  the  use  of  water  power. 

The  members  of  the  National  Electric  Light  Association  naturally 
are  more  interested  in  a  discussion  of  central  electric  stations  than 
in  any  other  development  in  the  electrical  field.  Naturally,  too,  they 
are  more  conversant  with  the  facts  relative  to  the  development  of  the 
present  central  electric  station  and  the  vast  work  it  is  now  doing.  There- 
fore mere  mention  of  the  more  important  points  is  all  that  is  necessary 
by  way  of  introduction.  - 

The  electric  light  business,  from  a  commercial  standpoint,  has  been 
entirely  a  growth  of  a  third  of  a  century.  Despite  its  youth,  however, 
it  is  an  all-important  factor  in  the  industrial  world.  In  the  United 
States  alone  there  are  at  present  in  the  neighborhood  of  6,000  central 
electric  stations,  not  including  the  thousands  of  isolated  plants  and  those 


devoted  to  street  railway  purposes.  These  stations  have  been  erected  at 
a  cost  of  approximately  two  billion  dollars  and  have  an  aggregate  yearly 
output  of  ten  and  one-half  billion  kilowatt  hours. 

The  beginning  of  the  electric  light  and  power  industry  in  the  United 
States  dates  from  1879,  in  which  year  Charles  F.  Brush  put  into  practical 
use  his  first  series  of  arc  lamps  in  Cleveland,  Ohio.  Soon  afterward 
y  local  electric  lighting  companies  were  organized  in  various  parts  of  the 
United  States  to  make  use  of  the  Brush  system.  The  credit  for  being 
first  to  install  a  central  station  to  operate  arc  lamps  by  means  of  the 
Brush  system  belongs  to  the  California  Electric  Light  Company  of  San 
Francisco. 

Previous  to  Mr.  Brush's  successful  effort  there  had  been  many  ex- 
periments and  numerous  public  tests  of  electric  lighting.  As  far  back 
as  1808,  Sir  Humphry  Davy,  then  an  assistant  lecturer  in  the  Royal 
Institution  in  London,  demonstrated  the  practicability  of  Volta's  theory 
of  obtaining  electricity  from  cells  consisting  of  unlike  metals  immersed 
in  a  liquid,  and  was  one  of  the  first  to  apply  this  new  source  of  power 
to  the  investigation  of  the  elements.  In  1844  Foucault,  a  French 
physicist,  experimented  with  carbon  deposited  in  gas  retorts,  and  by 
using  this  in  connection  with  the  Bunsen  battery  was  able  to  produce 
such  a  steady  and  continuous  light  as  to  make  the  process  applicable 
to  photographic  purposes.  Prof.  B.  A.  Stillman,  Jr.,  and  Dr.  W.  H. 
Goode,  with  the  help  of  Yale  College's  500-cell  battery,  also  in  the  early 
forties,  made  satisfactory  experiments  in  obtaining  photographic  im- 
pressions by  light  reflected  from  the  surface  of  a  medallion  to  the  iodized 
surface  of  a  daguerreotype  plate. 

In  1852  E.  S.  Staite,  an  Englishman,  met  with  some  success  in  an 
experimental  lighting  of  streets  in  several  English  towns,  while  in  1855 
LaCassagne  and  Thiers,  employing  a  column  of  mercury  and  special 
mechanism  to  lift  and  feed  the  carbons,  lighted,  as  an  experiment,  one  of 
the  public  squares  of  Lyons,  France.  The  first  patent  for  a  dynamo 
electric  machine  was  granted  in  1870  to  Z.  T.  Gramme,  a  Belgian.    This 


first  dynamo  electric  machine,  like  other  machinery  of  a  similar  character, 
was  based  primarily  upon  the  principle  discovered  by  Faraday,  accord- 
ing to  which  if  magnets  or  coils  of  wire  be  constantly  changed  with 
relation  to  each  other,  electric  currents  are  generated,  the  current  de- 
pending upon  the  strength  and  number  of  magnets,  the  velocity  and 
direction  of  their  movements  and  the  number  of  coils  or  the  turns  of 
wire  in  each  one  of  them. 

In  1876  Jablochkoff  introduced  his  arc  lamp.  This  lamp,  more  simple 
than  any  preceding  it,  consisted  of  two  vertical  parallel  sticks  of  carbon 
separated  slightly  by  an  insulating  material  which  was  consumed  at  the 
same  time  as  the  carbons.  They  burned  best  with  an  alternating  current, 
which  insured  an  even  consumption  of  the  carbons.  Jablochkoff  patented 
his  lamps  all  over  the  world  and  soon  they  were  used  in  several  com- 
munities. Another  important  achievement  at  this  time  was  that  of 
William  Wallace  and  Prof.  Moses  G.  Farmer,  who  exhibited  at  the 
Philadelphia  Centennial  Exposition  of  1876  the  only  dynamo  that  sup- 
plied current  for  use  in  any  way  for  the  illumination  of  the  exposition. 

It  was  in  1877  that  Thomas  A.  Edison,  following  his  inventions  in 
the  telegraph  and  telephone  field  and  in  the  same  year  that  he  in- 
vented the  phonograph,  took  up  for  solution  the  problem  of  producing 
electric  light  by  an  incandescent  filament.  It  will  be  recalled  that  in 
1879  Charles  F.  Brush  established  an  arc  lamp  system  in  Cleveland 
and  that  soon  afterward  numerous  local  companies  were  organized  to 
make  use  of  the  Brush  system. 

The  problems  Edison  set  himself  to  solve  were  two  in  number,  namely, 
the  subdivision  of  electric  current  into  many  small  units  and  the  in- 
vention of  a  commercially  practical  incandescent  burner  for  a  lamp. 
The  question  of  the  subdivision  of  electric  current  had  been  studied 
by  many  scientists  for  a  quarter  of  a  century  and  had  been  abandoned 
by  them  as  impracticable.  By  the  latter  part  of  1879  Edison  had 
solved  the  problems  and  had  installed  at  Menlo  Park,  N.  J.,  where  he 
had  had  his  laboratory  for  several  years,  the  first  complete  system  of 


incandescent  lighting  in  the  world.  After  many  trials  he  had  succeeded 
in  carbonizing  a  piece  of  cotton  sewing  thread,  bent  it  into  a  loop  form 
and  sealed  it  into  a  glass  globe  from  which  the  air  had  been  exhausted 
until  a  vacuum  up  to  one-millionth  of  an  atmosphere  had  been  pro- 
duced. It  proved  an  experimental  success.  He  then  substituted  car- 
bonized paper  for  the  sewing  thread  with  even  better  results.  Between 
October  21,  1879,  and  December  21,  1879,  several  hundred  paper-carbon 
lamps  were  made  and  used  in  his  Menlo  Park  lighting  system. 

The  fact  that  in  1902  there  were  20,000,000  and  in  1907  46,000,000 
incandescent  lamps  in  service  and  that  in  1911  there  will  be  approxi- 
mately 90,000,000  manufactured,  tells  the  story  of  Edison's  success 

The  Edison  incandescent  lamp  came  as  a  surprise  to  the  scientist 

and  the  public  alike,  as  a  blow  to  the  gas  lighting  industry  and  as  an 
irritating  circumstance  to  those  interested  in  arc  lamp  lighting.  For 
several  years  following  its  invention  the  introduction  of  the  incandescent 
lamp  was  bitterly  fought  by  the  arc  lamp  and  gas  lighting  interests. 
Fortunately,  however,  not  many  years  passed  before  it  was  recognized 
that  all  these  interests  would  be  best  served  by  working  in  harmony. 

It  is  not  surprising  that  there  should  have  been  the  early  antagonism 
between  those  representing  the  arc  lamp  and  the  incandescent  lamp, 
for  the  two  systems  were  in  many  respects  radically  opposed  to  each 
other  fundamentally.  Neither  is  it  surprising  that  in  the  end  the  two 
systems  came  into  close  working  agreement.  Arc  lighting,  with  its 
high  voltage  and  large  units  of  harsh  light,  was  best  suited  for  exterior 
use,  while  incandescent  lighting  was  best  adapted  for  interior  use,  be- 
cause of  its  low  voltage  and  small  units  of  light  of  softer  quality. 

The  first  regular  central  station  for  incandescent  lighting  in  the 
world,  except  that  at  Menlo  Park,  went  into  operation  on  Holbora 
Viaduct,  London,  January  12,  1882.  The  Pearl  Street  station  in  New 
York  City,  the  first  one  in  the  United  States  except  that  at  Menlo  Park, 
and  except  a  small  Edison  station  in  Appleton,  Wisconsin,  went  into 
operation  September  4,  1882. 


At  its  inception  the  Pearl  Street  station  supplied  current  for  only 
four  hundred  lights.  At  the  present  time  the  New  York  Edison  Co., 
the  successor  to  the  first  company,  organized  in  1880,  supplies  more 
than  100,000  customers,  wired  for  over  4,400,000  incandescent  lamps. 

In  the  years  from  1882  on  numerous  companies  operating  under 
Edison  patents  were  organized  for  the  purpose  of  installing  the  in- 
candescent lamp  lighting  system  throughout  the  United  States  and 
in  several  foreign  countries.  The  first  permanent  Edison  station  in 
Europe  was  opened  at  Milan,  Italy,  March  3,  1883,  and  the  first  one 
in  South  America  at  Santiago,  Chile,  in  the  summer  of  1883. 

The  "three-wire  system,"  which  was  a  remarkable  step  in  advance, 
was  first  used  by  Edison  in  the  stations  at  Sunbury,  Pa.,  and  Brockton, 
Mass.,  in  1883. 

The  work  of  improving  the  incandescent  lamp,  now  that  it  had  be- 
come a  commercial  possibility,  was  continued  by  Edison  and  many  other 
inventors.  The  first  step  was  to  lower  the  cost  of  the  lamp,  which  in 
the  beginning  was  |1.25  each  per  lamp.  By  discovering  methods  for 
producing  the  lamps  by  mechanical  processes  Edison  cut  the  cost  of 
manufacture  gradually  until  by  the  fourth  year  in  which  they  were 
made  in  any  quantity  the  cost  was  only  thirty-seven  cents  each.  Soon 
afterward  he  reduced  the  cost  to  twenty-two  cents  each. 

The  early  crude  forms  of  incandescent  lamps  were  rapidly  followed 
by  the  fibrous  carbon  and  other  forms  of  high  resistance  carbon  through 
many  improvements  up  to  the  tantalum  and  tungsten  lamps  of  to-day. 
The  changes  in  material  used  and  the  heavy  reduction  in  the  cost  of 
photometric  measure  still  further  reduced  the  cost  of  the  lamps  to  the 
public,  while  at  the  same  time  the  efficiency  of  the  lamps  was  greatly 
increased. 

The  new  Edison  stations  built  to  exploit  the  incandescent  lamp 
method  of  lighting  were  equipped  with  what  were  known  as  "Jumbo" 
dynamos.  The  substituting  of  one  large  single  dynamo  for  several  small 
machines  and  of  connecting  this  directly  with  the  driving  engine  on  the 


6 

same  base,  thus  obtaining  high  armature  speed,  without  separate  belting, 
shafting  and  countershafting,  and  closer  regulation,  was  a  bold  step  for 
that  day.  Several  of  these  Edison  "Jumbos"  were  still  in  use  up  to  within 
a  few  years  ago.  The  "Jumbo"  exhibited  in  Paris  in  1881  had  a  capacity 
of  only  700  lights,  but  was  looked  upon  as  a  wonder. 

Edison  invented  for  the  use  of  his  central  station  the  "feeder  and 
main"  system  for  keeping  the  electrical  pressure  uniform  on  all  the 
distributing  wires,  without  which  a  comprehensive  distributing  system 
for  incandescent  electric  lighting  is  impractical.  He  also  invented  a 
practical  meter  for  measuring  current  and  many  safety  and  controlling 
devices  for  his  stations. 

The  Pearl  Street  station,  looked  upon  as  such  a  marvel  in  1882, 
would  make  a  striking  comparison  with  the  present  modern  electric 
station  if  it  were  still  in  existence.  Generators  of  eight,  ten  and  twelve 
thousand  kilowatts  are  now  found  in  numerous  of  the  modern  electric 
stations  of  the  country,  while  the  Northwest  station  of  the  Common- 
wealth Edison  Company,  now  under  construction,  in  Chicago,  is  to  con- 
tain six  20,000  kilowatt  turbo-generators,  and  the  Washington  Water 
Power  Company  of  Spokane  is  now  having  built  two  units  each  capable 
of  carrying  17,400  kilowatts  continuously,  each  to  be  directly  connected 
to  a  water  wheel. 

The  early  conflict  between  the  arc  lamp  and  the  incandescent  lamp 
interests  was  followed  by  the  attempt  to  unify  the  two  systems,  resulting 
finally  in  the  development  of  the  use  of  the  alternating  current.  It  was 
in  1886  that  George  Westinghouse  installed  the  first  regular  alternating 
current  station  in  America,  at  Buffalo,  N.  Y. 

One  of  the  first  steps  in  the  development  of  the  alternating  current 
was  that  taken  by  a  European  inventor  named  Gaulard,  who,  in  1883 
brought  out  a  system  of  operating  induction  coils  in  series  by  means 
of  which  the  high  potential  current  of  an  alternating  current  generator 
could  be  delivered  as  low  potential  currents  on  local  circuits  and  at 


the  point  of  consumption.  William  Stanley,  Jr.,  took  up  the  question  in 
1883  and  1884  and  with  such  success  that  he  was  able  to  apply  his  dis- 
coveries, in  1886,  in  a  commercial  way  at  Great  Barrington,  Mass. 
While  the  equipment  was  necessarily  crude,  the  operation  was  so  suc- 
cessful as  to  enlist  the  support  of  George  Westinghouse,  with  the  result 
now  known  to  all.  Prof.  Elihu  Thomson  and  other  American  inventors 
soon  after  Mr.  Stanley's  successful  work  made  notable  improvements 
in  the  same  field. 

With  the  revolutionizing  discovery,  in  1888,  of  the  rotating  field 
principle  of  alternating  current  generators  by  Tesla,  Stanley  and  other 
inventors  in  this  country,  and  by  Ferraris  and  others  in  Europe,  began 
the  actual  development  of  alternating  current  apparatus.  This  made 
possible  the  generation  of  polyphase  alternating  currents  and  long  dis- 
tance transmission,  without  which  the  central  station  industry  could 
not  possibly  have  come  to  its  present  magnitude. 

While  the  present  central  electric  station  and  its  manifold  adjuncts 
rest  upon  the  foundation  of  the  work  done  a  quarter  of  a  century  ago 
by  Edison,  Stanley,  Thomson,  Westinghouse,  Tesla  and  numerous  other 
inventors,  the  progress  made  during  the  last  dozen  years  alone  has  been 
such  as  to  make  all  the  stations  and  appurtenances  of  the  eighties  and 
early  nineties  appear  imperfect  and  incomplete.  There  have  been 
changes  in  every  aspect  of  the  central  station  industry. 

The  most  remarkable  change  has  been  brought  about  through  the 
development  of  the  high  tension,  long  distance  transmission  lines.  This 
has  been  largely  a  development  of  the  last  decade,  and  is  more  marked 
at  the  present  time  than  ever  before.  The  first  successful  commercial 
line  in  the  United  States  transmitting  current  for  long  distance  at  high 
voltage  was  constructed  in  1892  between  San  Bernardino  and  Pomona,  ^X 
California.  The  line  was  a  little  less  than  29  miles  long,  and  transmitted 
800  horse-power  at  10,000  volts,  single-phase.  To-day  the  distance  over 
which  current  of  high  voltage  can  be  transmitted  has  been  increased 


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to  approximately  210  miles,  with  voltage  as  high  as  110,000  volts,  while 
135,000  volts  is  proposed. 

There  are  numerous  large  electric  companies  which  now  have  over 
100  miles  of  high  tension  transmission  lines.  A  partial  list  of  these 
companies  with  the  maximum  voltage  is  given  below: 

Partial  List  of  Companies  Operating  in  United  States  Having  Over  100  Miles  of  High 

Tension  Transmission  Lines 


Name  of  Company  State  Maximum 

Butte  Electric  &  Power  Co Montana 

Central  Colorado  Power  Co *  * '.  .Colorado! ......... 

Commonwealth  Power   Co [  .Michigan. .'!!!!!!.'! 

Great  Palls  Power  Co !'.!*..'!  Montana. .! .. .... '. 

Great  Western  Power  Co California  ..'..'.'.'.'. 

Hudson  Eiver  Water  Power  Co .' .New  York 

Mt.  Whitney  Power  Co '.'California';!;;;;;; 

JNiagara,  Lockport  &  Ontario  Power  Co New  York 

Northern  California  Power  Co '. California  ;;;;;;;; 

Pacific  Gas  &  Electric  Co ,,,    "    ;;;;;;;; 

Pacific  Light  &  Power  Co «  ;;;;;;' 

Pacific  Power  &  Light  Co ; . ; ;  Washington  .;;;;;; 

Puget  Sound  Power  Co «  ..;.;;; 

San  Joaquin  Light  &  Power  Co "         ..*;;;;;; 

Seattle-Tacoma  Power  Co Washington  .;;;;;; 

Sierra  &  San  Francisco  Power  Co California  . . ; ; 

Sierra  Pacific  Electric  Co Nevada  ...;;;;;;;; 

Southern  California  Edison  Co California  ;;;;;;** 

Southern  Power  Co N.  and  S.  Carolina! 

Tellunde  Power  Co Colorado  and  Utah. 

Washington  Water  Power  Co Washington 


Voltage 

80,000 

100,000 

110,000 

100,000 

100,000 

30,000 

34,000 

60,000 

66,000 

60,000 

60,000 

66,000 

50,000 

60,000 

60,000 

100,000 

22,000 

66,000 

100,000 

40,000 

60,000 


The  Pacific  Gas  &  Electric  Company  now  has  approximately  1,000 
miles  of  high  tension  transmission  lines,  being  the  leader  of  all  com- 
panies in  the  world  in  this  respect. 

The  financial  organization  of  the  companies  operating  the  electric 
stations  has  kept  pace  with  the  numerous  changes  in  physical  equipment, 
methods  and  appliances.  Vast  amounts  of  capital  have  been  used  to 
extend  the  industry  in  order  that  advantage  might  be  taken  of  the 
new  inventions  and  methods  constantly  coming  to  the  front.  This  has 
meant  both  a  great  rebuilding  of  stations  and  a  growing  centralization 
of  financial  control.    The  rapid  establishment  during  the  last  few  years 


9 

of  hydro-electric  power  transmission  enterprises  has  been  no  more  start- 
ling than  the  growth  of  the  present  great  companies  interested  in  the 
central  station  industry. 

It  would  be  most  interesting  if  it  were  possible  to  give  the  exact 
present  status  of  the  central  electric  station  industry.  Unfortunately, 
the  latest  reliable  returns  are  those  contained  in  the  1907  Special  Re- 
port of  the  Bureau  of  Census  of  the  Department  of  Commerce?  and 
Labor.  This  report  was  compiled  under  the  direction  of  Mr.  Thomas 
Commerford  Martin,  a  former  president  of  the  American  Institute  of 
Electrical  Engineers  and  a  prominent  expert  in  the  electrical  world. 
Mr.  Martin  is  also  a  co-author  with  Mr.  Frank  Lewis  Dyer  of  a  most 
enjoyable  life  of  Edison.  Both  the  Special  Report  of  the  Census  Bureau 
and  Messrs.  Martin  and  Dyer's  work  on  Edison  have  been  freely  used 
by  the  writer  of  the  present  work  and  he  wishes  to  make  due  acknowledg- 
ment of  the  help  thus  received. 

It  should  be  stated  in  the  beginning  that  the  Census  Bureau  in  its 
reports  uses  the  word  "station"  as  a  synonym  for  "plant,"  although 
a  "station,"  so  called,  may  comprise  two  or  more  "plants"  in  a  single 
city.  The  tendency  toward  financial  and  physical  consolidation  makes 
it  difficult  to  obtain  figures  that  fairly  represent  the  actual  number 
of  "stations"  or  "plants." 

In  the  year  1907  there  were  4,714  central  electric  stations  in  this 
country  devoted  to  electric  light  and  power  business.  The  output  of 
these  4,714  stations  for  the  year  1907  aggregated  5,862,276,737  kilowatt 
hours.  This  does  not  represent  by  any  means  the  entire  production 
of  electrical  energy,  as  the  output  of  electric  railway  stations  and  of 
miscellaneous  and  isolated  electric  plants  is  not  included.  The  figures 
hereafter  submitted  in  this  article,  it  should  be  remembered,  will  not 
include  the  business  of  the  street  railways  and  the  miscellaneous  and 
isolated  stations. 

In  order  to  show  the  remarkable  growth  in  the  number  of  stations 


10 

and  their  equipment  between  the  years  1902  and  1907,  the  following 
table  is  given: 

Comparative  Growth  of  Stations  and  Equipment  Between  the  Years  1902  and  1907 

Increase 
1907  1902  Amount  Pet. 

Number  of  central  electric  sta-  „   o 

tions    4,714  3,620  1,094  30.2 

Cost  of  construction  and  equip-  ^       ^^      *^«r. -.^ro  o^ta      htq 

ment  $1,096,913,622.     $604,740,352.     $592,173,270.     117.3 

Horsepower  capacity  of  stations.           4,032,365            1'830,594           2,201,771      120.3 
Kilowatt  capacity  of  stations....            2,709,225            1.212,235            1'496,990      123.5 
Kilowatt  capacity  per  station...                     574                     384                     240        a.» 
Cost  of  construction  and  equip- 
ment per  kilowatt  capacity $404.  $416.  

Oftput^^of     stations     (kilowatt    ^^^^^^^.^^^     2,507,051,116     3.365,225,622      133.8 
°hSSL) '"^.  !!!*'".. /.'^"  1,243,588  692,666  651,033        79.5 

Aside  from  the  growth  in  the  number  of  stations  the  striking  features 
of  the  above  table  are  the  relatively  larger  increase  in  the  kilowatt  ca- 
pacity per  station  and  the  relatively  smaller  cost  of  construction  and 
equipment  per  kilowatt  capacity.  This  all  means  more  efficiency  and  an 
improved  service  at  a  lower  cost  to  the  public. 

Authorities  believe  that  since  the  year  1907  there  has  been  an  increase 
of  approximately  80%  in  the  equipment  and  output  of  central  electric 
stations,  with  a  smaller  percentage  increase  in  the  number  of  stations, 
due  to  larger  units.  Using  this  estimate  of  growth  as  a  basis  the  follow- 
ing comparison  for  the  years  1902  and  1911  have  been  made : 

Comparative  Growth  of  Stations  and  Equipment  Between  the  Years  1902  and  1911 

Increase 
*1911  1902  Amount  Pet. 

^ti^nf  ?^?'°*"V!'°"!"°  ."":  6.000  3,620                  2,380  60.6 

Co^t  of  construction  and_  equip-  ^^^^^^^^^  $504,740,352.  $1,470,269,648.  291.2 

Horsepoweicapacity  of  stations..  7,259,000  1,830,694          5,428,406  296.5 

Kilowatt  capacity  of  stations...  4,877,000  1,212,235           3,664,765  302.3 

^hri)°*... '!'!"".. ^"''"'•■10,552,000,000     2,507,051,115     8,044,948,886      320.3 

*  Figures  are  partly  estimated,  actual  reports  for  1907  being  the  basis  with  an 
added  80%  increase  for  all  items  except  that  of  the  number  of  stations,  which  has  been 
approximated. 


11 

Here  is  a  partly  estimated  increase  in  nine  years'  time  equal  to  60.5% 
in  the  number  of  stations,  equal  to  291.2%  in  the  cost  of  construction 
and  equipment,  equal  to  302.3%  in  the  kilowatt  capacity,  and  equal  to 
320.8%  in  total  output.  For  the  decade  ending  with  the  year  1910  the 
increase  in  population  of  the  United  States  was  equal  to  only  21%. 

The  effect  of  the  great  increase  in  central  electric  stations  on  the 
country's  gas  industry  is  of  special  interest.  Modern  improvements  in 
electrical  industry,  particularly  the  advent  of  larger  and  more  economical 
generating  units,  have  so  reduced  the  cost  of  electrical  current,  while 
at  the  same  time  the  quality  of  the  product  has  been  so  improved,  as 
greatly  to  minimize  the  increase  in  the  use  of  gas  for  illuminating  pur- 
poses. This  has  had  the  effect  of  forcing  the  gas  interests  to  push  the 
use  of  their  product  for  cooking,  heating  and  other  industrial  purposes, 
where  there  is  no  material  competition  with  electricity.  The  result  has 
been  to  develop  a  healthy  and  stable  condition  in  the  artificial  gas  busi- 
ness and  to  afford  the  public  the  practical  and  economical  use  of  both 
products. 

It  is  not  possible  to  give  a  comparison  of  the  growth  of  the  two  indus- 
tries over  the  last  ten  years.  The  Census  Bureau's  reports,  however,  show 
that  for  the  five  years  between  1900  and  1905  the  increase  in  the  number 
of  gas  plants  was  equal  to  16.2% ;  the  increase  in  the  cost  of  construction 
and  equipment  equal  to  27.9%,  and  the  increase  in  gross  income  equal 
to  65.3%. 

A  feature  of  the  electric  industry  in  which  the  public  is  particularly 
interested  relates  to  private  and  municipal  ownership.  The  demand  for 
the  municipal  ownership  of  public  utilities  that  has  been  made  with 
greater  or  less  insistence  throughout  the  country  during  the  last  few 
years  has  caused  apprehension  in  some  quarters  that  private  ownership 
of  these  utilities  was  soon  to  be  a  thing  of  the  past.  Figures  at  hand 
serve  to  show  that,  so  far  as  the  electric  lighting  industry  is  concerned, 
municipal  oTVTiership  has  not  made  as  great  headway  as  has  private 
ownership. 


i 


12 

The  increase  in  municipal  stations  between  the  years  1902  and 
1907  was  equal  to  53.6%,  as  compared  with  an  increase  of  23.4%  in 
private  stations,  but  the  increase  in  kilowatt  capacity  of  the  munici- 
pal stations  was  only  84.3%,  against  an  increase  of  127.5%  for  the  pri- 
vate stations.  The  increase  in  output  of  municipal  stations  was  but 
47.8%,  as  compared  with  an  increase  of  141.1%  for  private  stations. 
The  cost  of  construction  and  equipment  was  also  much  less  in  the  case  of 
the  municipal  stations.  The  actual  number  of  municipal  stations  in 
1907  was  1,252,  as  compared  with  3,462  private  stations.  In  1902  there 
were  815  municipal  stations  and  2,805  private  stations.  While  this 
shows  a  larger  percentage  increase  in  the  number  of  municipal  stations, 
it  also  shows  a  smaller  percentage  increase  for  municipal  stations  in 
kilowatt  capacity  and  total  output. 

This  would  indicate  that  municipal  ownership  is  making  its  greatest 
progress  in  small  communities,  where,  frequently,  property  is  taxed  to 
pay  the  losses  of  the  municipal  station,  and  where  capital  would  not  think 
it  worth  while  to  enter.  The  small  increase  in  kilowatt  capacity  of 
municipally  owned  stations  shows  also  the  effect  of  indifferent  or  politi- 
cal management  and  a  lack  of  that  energy  which  so  characterizes  the 
privately  owned  stations. 

Again  turning  to  the  total  number  of  central  electric  stations  (other 
than  those  operated  by  street  railways,  etc.,  as  previously  explained)  in 
operation  in  1907  we  find  that  2,127  out  of  4,714,  or  45.1%,  were  used  for 
purely  electric  commercial  business.  The  other  2,587,  or  54.9%  of  the 
total,  were  composite  stations,  that  is,  operated  in  connection  w^ith  some 
other  industry  or  service.  The  kilowatt  capacity  of  the  purely  electric 
commercial  stations  was  58.1%  of  the  total  and  the  output  of  stations 
63.7%  of  the  total  of  all  stations. 

The  wonderful  changes  in  methods  and  equipment  that  have  come 
about  in  the  central  station  industry  are  well  illustrated  by  a  comparison 


I 


13 

of  the  kind,  number  and  kilowatt  capacity  of  dynamos  between  the  years 
1902  and  1907,  as  shown  in  the  following  table: 

Number,  Kind  and  Kilowatt  Capacity  of  Dynamos 


1907 

Direct  current,  constant-voltage — 

Number   of   dynamos 3,680 

Kilowatt  capacity   406,460 

Kilowatt  capacity  per  dynamo. . . .  110.0 

Direct  current,  constant-amperage — 

Number  of  dynamos 1,685 

Kilowatt    capacity    80,992 

Kilowatt  capacity  per  dynamo ....  47.5 

Alternating   single-phase   and   poly- 
phase current — 

Number  of  dynamos 6,808 

Kilowatt  capacity  2,221,773 

Kilowatt  capacity  per  dynamo ....  326.0 

Total- 
Number  of  dynamos 12,173 

Kilowatt    capacity    2,709,225 

Kilowatt  capacity  per  dynamo 222.0 

^Decrease. 


It  is  of  special  interest  to  note  in  the  above  table  the  much  larger 
units  in  service  in  1907.  The  total  number  of  dynamos  of  all  kinds 
was  cut  down  by  2.5%,  although  there  was  an  increase  of  123.5% 
in  kilowatt  capacity.  The  most  significant  feature  aside  from 
this  is  the  decrease  of  44.5%  in  the  kilowatt  capacity  of  di- 
rect-current, constant-amperage  dynamos  and  the  increase  of  201.7% 
in  the  kilowatt  capacity  of  the  alternating  single-phase  and  polyphase 
dynamos.  The  greatest  increase  was,  of  course,  in  the  alternating  poly- 
phase current,  but  the  Census  Report  does  not  distinguish  between  alter- 
nating single-phase  and  alternating  polyphase  current.  Were  it  possible 
to  give  detailed  figures  showing  present  equipment  it  would  be  found  that 
even  more  startling  changes  have  been  made  since  1907  than  were  made 
betw^een  the  years  1902  and  1907. 

Passing  to  a  consideration  of  primary  powder  some  impressive  figures 


1902 

Increase 
Amount 

Pet. 

3,823 

330,065 

86.5 

♦143 
76,395 

•  •  •  • 

♦3.7 
23.1 

•  •  •  • 

3,539 

145,866 

41.0 

*1,854 
♦64,874 

•  ■  •  • 

♦52.4 
♦44.5 

•  •  •  • 

5,122 

736,304 

143.5 

1,686 
1,485,469 

•  •  •  • 

32.9 
201.7 

•  •  •  • 

12,484 

1,212,235 

97.0 

♦311 
1,496,990 

•  •  •  ■ 

♦2.5 
123.5 

ik: 


y 


14 

are  found.  They  show  in  a  graphic  way  the  wonderful  increase  in  the 
last  decade  in  the  use  of  water  power  generated  current.  The  growth 
in  the  past  in  this  respect,  however,  is  nothing  compared  with  what  it 
should  be  in  the  years  to  come. 

Mr.  Sidney  Z.  Mitchell,  president  of  the  Electric  Bond  and  Share 
Company,  in  an  address  recently  delivered  at  a  public  hearing  held  under 
the  auspices  of  the  Transmission  Section  of  the  National  Electric  Light 
Association,  pointed  out  that  the  use  of  water  power  sites  for  electric 
generating  purposes  unfortunately  has  been  in  the  past  and  still  is 
greatly  retarded  by  inappropriate  laws  and  in  some  cases  total  lack  of 
laws.  As  a  result,  developers  of  water  power  cannot  obtain  definite  and 
reasonable  tenures  such  as  to  justify  the  expenditure  of  capital  for  de- 
velopment. This  applies  particularly  to  the  development  of  water  pow- 
ers upon  navigable  streams  and  especially  where  the  fee  to  the  neces- 
sary lands  rests  with  the  Federal  Government. 

Another  serious  difficulty  in  the  way  of  getting  capital  for  such  de- 
velopment is  that  in  practically  all  cases  the  water  is  owned  by  the 
state  in  which  it  is  located,  thus  subjecting  those  who  develop  the 
power  to  the  regulation  of  two  masters,  namely,  the  state,  as  to  the 
water,  and  the  Federal  Government,  as  to  the  law.  The  fact  that  one 
government  may  pass  laws  that  a  corporation  shall  conduct  its  busi- 
ness in  a  certain  way  and  in  no  other  way,  and  another  and  equally 
potent  government  may  pass  laws  requiring  the  same  corporation  to 
do  a  public  service  business  in  a  different  way,  needs  only  to  be  stated 
to  show  that  such  conflict  of  laws  is  fatal. 

Mr.  Mitchell,  like  other  students  of  the  question,  believes  that  real 
conservation  of  water  power  means  the  use  of  water  power.  And  yet  the 
question  of  control  between  the  Federal  Government  and  the  several 
states  in  which  are  located  the  undeveloped  water  power,  together  with 
the  antagonism  against  capital  so  frequently  found,  is  denying  to  the 


15 

public  the  right  to  use  the  water  power  found  in  such  great  quantities 
in  various  sections  of  the  country  and  without  doubt  is  retarding  the 
natural  growth  of  the  country. 

While  these  obstacles  in  the  way  of  providing  the  necessary  capital 
for  water  power  development  affect  many  water  powers  on  navigable 
streams  and  upon  the  public  domain,  especially  in  the  newly  opened  sec- 
tions of  the  West,  it  must  be  remembered  that  there  are  many  water 
powers  available  whose  use  do  not  include  dealings  with  the  Federal 
Government  and  where  permanent  fee  titles  are  obtainable  free  from 
any  legal  complications.  Where  these  conditions  prevailed,  there  was 
a  tremendous  increase  in  water  power  development  during  the  years 
between  1902  and  1907,  this  being  the  period  during  which  was  begun 
the  development  in  the  high  tension,  long  distance  transmission  of 
hydro-electric  energy.  A  comparison  of  the  various  kinds  of  primary 
power  for  the  years  1907  and  1902  follows: 

Comparison  of  Primary  Power 

Increase. 

1907  1902  Amount  Pet. 

Number  of  stations 4,714  3,620  1,094  30.2 

Total  number  of  machines 10,150  7,485  2,665  35.6 

^'^^^^s.^^in.       .e|T«0        ..BJ.M1        1...50*  ^^.4 

Water  whSs ' '.  *. .' '. ". .' ". '. ."..". .' 1,349  087  438,472  910,615           207.7 

Total  hrsSower  capacity r.  4,032,365  1,830,594  2,201,771           120.3 

Total     horsepower     capacity     per 

station 855  506         

Total     horsepower     capacity    per 

machine    397  184        

The  fact  that  during  the  five-year  period  the  percentage  increase 
in  water  power  was  considerably  more  than  double  the  percentage  in- 
crease in  steam  power,  is  highly  significant  of  the  trend  of  the  times. 
Naturally,  the  largest  percentage  increase  in  kilowatt  capacity  was  m 
those  more  newly  developed  sections  of  the  country  where  water-power 


¥  1 


16 

sites  had  not  been  previously  utilized.  While  the  water  powers  of  the 
Eastern  States  have  been  more  thoroughly  and  completely  developed 
than  those  of  the  Western  States,  it  must  be  remembered  that  the 
greater  portion  of  the  developments  in  the  older  sections  of  the  country 
were  made  for  driving  factories  located  at  the  power  sites  before  the 
electric  transmission  of  energy  had  become  commercially  practicable. 
In  the  older  sections  factories  were  brought  to  the  power  sites,  whereas 
in  the  later  developments  of  the  newer  sections  of  the  country  the  more 
economical  and  convenient  method  was  adopted  of  generating  electric 
power  by  water  and  transmitting  it  over  wide  areas  to  points  where 
it  could  be  more  conveniently  and  economically  used. 

The  ten  states  showing  the  greatest  percentage  increase  in  kilowatt 
capacity  are  shown  herewith : 

The  Ten  States  in  Which  Kilowatt  Capacity  of  Central  Electric  Stations  Showed 
Greatest  Percentage  Increase  in  Years  from  1902  to  1907 

Kilowatt  Capacity 

Actual  Actual  Increase 

1907  1902  Actual  Pet. 

Washington  66,308  13,679  52,629  384.7 

Georgia    35,446  7,620  27,826  365.2 

South    Carolina 51,271  13,390  37,881  282.9 

Minnesota    78,516  20,999  57,517  273.9 

Kansas   30,307  8,596  21,711  252.6 

Oregon    32,587  11,165  21,422  191.9 

California    238,480  83,816  154,664  184.5 

Maryland    36,223  13,207  23,016  174.3 

New   York 482,031  187,252  294,779  157.4 

Maine    39,290  15,291  23,999  156.9 

It  will  be  noted  that  the  above  table  shows  New  York  ninth  in  the 
list  of  States  in  point  of  percentage  increase  in  kilowatt  capacity,  al- 
though it  leads  all  other  States  in  the  actual  increase  in  kilowatt  capacity. 
This  is  undoubtedly  due  principally  to  the  developments  of  Niagara 
Falls  and  to  the  transit  improvements  in  New  York  City. 

In  order  to  show  the  ten  states  in  which  the  actual  increase  in  total 
kilowatt  capacity  was  the  greatest  between  the  years  1902  and  1907  the 
following  table  is  given: 


>        I 


17 

The  Ten  States  in  which  Kilowatt  Capacity  of  Central  Electric  Stations  was  the 

Greatest  in  1907,  with  a  1902  Comparison 

Kilowatt  Capacity 

Increase 

1907  1902  Amount  Pet. 

New    York 482,031  187,252  294,779  157.4 

California    238,480  83,816  154,664  184.5 

Pennslyvania  212,543  121,388  91,155  75.1 

HHnois    209,226  100,320  108,906  108.6 

Massachusetts    135,924  90,624  45,300  50.0 

Ohio    126,533  69,811  56,722  81.3 

Michigan   101,714  44,176  57,538  130.2 

Indiana  81,576  38,144  43,432  113.9 

Minnesota    78,516  20,999  57,517  273.9 

New   Jersey 70,566  46,120  24,446  53.0 

The  last  two  tables  given  and  the  two  which  will  follow  show  clearly, 
among  other  things,  that  the  greatest  expansion  in  the  development 
of  electric  power  has  been  in  the  South  and  the  West,  the  progress  in  the 
Eastern  States  having  been  relatively  less  marked.  The  State  of  New 
York  retained  first  place  among  all  the  states  in  respect  to  the  actual 
increase  in  kilowatt  capacity,  but  in  point  of  percentage  increase  oc- 
cupied only  ninth  place.  The  State  of  Washington  acquired  first  place 
among  all  the  states  in  respect  to  the  percentage  increase  in  kilowatt 
capacity,  although  its  actual  kilowatt  capacity  in  1907  was  so  small  as 
not  to  give  the  state  a  place  among  the  first  ten  having  the  largest 
kilowatt  capacity. 

The  two  last  tables  and  the  remarks  following  them  should  be  con- 
sidered in  connection  with  the  following  table  showing  the  ten  states  in 
which  the  output  of  stations  was  the  greatest: 

The  Ten  States  in  Which  Output  of  Stations  Was  Greatest  in  1907,  with  a  1902 

Comparison 

Output  of  Stations  (Kilowatt  Hours) 

Increase 

1907  1902            Amount  Pet. 

New  York 1,452,222,471  701,769,716  750,452,755  106.9 

California    661,606,309  152,728,042  508,878,267  333.2 

Illinois    467,657,328  161,643,646  306,113,682  189.5 

Pennsylvania    416,554,167  241,094,328  175,459,839  72.8 

Washington  257,785,236  19,722,262  238,062,974        1,207.1 

Massachusetts    219,425,607  125,813,392  93,612,215  74.4 

Ohio   217,311,924  127,437,383  89,874,541  70.5 

Michigan    208,154,199  80,564,630  127,589,569  158.4 

Missouri   147,328,446  57,450,731  89,877,715  156.4 

New    Jersey 140,527,522  78,739,456  61,788,066  78.5 


18 

Naturally,  the  remarkable  showing  of  the  State  of  Washington  will 
first  attract  the  attenion  of  the  reader.  An  increase  in  output  of  sta- 
tions in  five  years  equal  to  1,207.1%  is  such  an  advance  as  to  be  start- 
ling. It  will  be  noticed  also  that,  while  the  State  of  Washington  held 
fifth  place  among  all  the  states  in  1907  in  point  of  output,  its  output  in 
1902  was  so  very  small  as  to  put  it  far  in  the  background.  It  will  be 
recalled  that  a  previous  table  showed  the  State  of  Washington  in  first 
place  among  all  the  states  in  respect  to  the  percentage  increase  in  kilo- 
watt capacity  during  the  five  year  period  between  1902  and  1907.  Evi- 
dently this  state  is  going  to  play  a  much  greater  part  in  power  develop- 
ment in  the  years  to  come. 

The  following  table  shows  a  comparison  of  the  increase  in  kilowatt 
capacity  and  the  population  by  districts: 


Central  Electric  Stations  by  Geographic  Divisions 

in  Population 

1907 

North  Atlantic — 

Number  of  stations 1,070 

Kilowatt   capacity   1,054,528 

Population   23,779,013 

South  Atlantic — 

Number  of  stations 390 

Kilowatt   capacity 195,309 

Population    11,574,988 

North  Central — 

Number  of  stations 2,095 

Kilowatt  capacity   805,012 

Population    29,026,645 

South  Central — 

Number  of  stations 679 

Kilowatt   capacity 165,969 

Population 16,368,558 

Western — 

Nimiber  of  stations 480 

Kilowatt  capacity   488,407 

Population    4,783,557 

Total  United  States- 
Number  of  stations 4,714 

Kilowatt  capacity 2,709,225 

Population    85,532,761 


in  Comparison  with  the  Increase 

Increase 


1902 


Amount 


Pet. 


913 

517,549 

21,778,196 

157 

536,979 

2,000,817 

17.2 

103.8 

9.2 

251 

62,301 

10,770,414 

139 
133,008 
804,574 

55.4 

213.5 

7.5 

1,706 

375,514 

27,087,206 

389 

429,498 
1,939,439 

22.8 

114.4 

7.2 

404 

82,259 
14,651,535 

275 

83,710 

1,717,023 

68.1 

101.8 

11.7 

346 

174,612 
4,289,085 

134 

313,795 
494,472 

38.7 

179.7 

11.5 

3,620 

1,212,235 

78,576,436 

1,094 
1,496,990 
6,956,325 

30.2 
123.5 

8.9 

19 


The  above  geographic  divisions  are  rather  arbitrary  and  it  woula 
seem  that,  in  order  to  get  a  more  comprehensive  view  of  the  important  sub- 
ject of  increase  in  population  as  compared  with  increase  in  kilowatt 
capacity,  more  subdivisions  should  be  given.  The  Western  division,  for 
example,  includes  all  the  territory  West  of  a  line  drawn  from  the  North- 
west corner  of  North  Dakota  to  the  Southwest  corner  of  Texas.  De- 
spite the  rather  broad  lines  on  which  the  table  is  laid  out  it  is  interest- 
ing as  again  emphasizing  the  great  growth  in  electrical  development 
going  on  in  the  Western  part  of  our  country. 

Turning  to  the  discussion  of  the  financial  questions  involved  in  the 
consideration  of  the  central  electric  stations  it  is  well  first  to  point  out 
the  progress  made  between  the  years  1902  and  1907  in  increasing  the 
net  revenue  from  operations  as  compared  with  the  cost  of  construction 
and  equipment.     This  is  shown  in  the  follo\\ing  table: 

Relation  of  Earnings  to  Cost  of  Construction  and  Equipment 

Increase 
1907 
Number  of  central  electric   sta- 
tions      4,714 

Cost  of  construction  and  equip- 
ment      $1,096,913,622. 

Gross   income 175,642,338. 

Pet.  of  gross  income  to  cost  of 

construction  and  equipment. . .  16.0% 

Total    expenses $106,205,149. 

Pet.  of  total  expenses  to  cost  of 

9.7% 
$69,437,189. 


construction  and  equipment. . . 

Net   operating  revenue 

Pet.  of  net  operating  revenue  to 
cost  of  construction  and  equip- 
ment    


1902 

Amount 

Pet. 

3,620 

1,094 

30.2 

$504,740,352. 
85,700,605. 

$592,173,270. 
89,941,733. 

117.3 
104.9 

16.9% 
$55,457,830. 

$50,747,*319. 

•  ■  ■  • 

91.5 

11.0% 
$30,242,776. 

$39,i94,'414. 

•  •  •  • 

129.6 

6.3% 


5.9% 


It  will  be  noticed  in  the  above  table  that,  while  in  1907  there  was  a 
slightly  smaller  percentage  of  gross  income  to  cost  of  construction  and 
equipment  than  in  1902,  the  total  expenses  were  so  much  smaller  as  to 
bring  about  a  substantial  increase  in  the  percentage  of  net  operating 
revenue  to  cost  of  construction  and  equipment,  a  most  gratifying  fact, 
especially  when  it  is  realized  that  prices  charged  the  public  were  on  a 
constantly  declining  scale. 


20 


y 


This  indicates  more  modem  and  better  insulations  and  speaks  well 
for  the  eflfieiency  with  which  the  business  was  conducted.  A  percentage 
of  net  operating  revenue  to  cost  of  construction  and  equipment  of  only 
6.3%  is  not  large  to  be  sure,  but  it  is  an  excellent  showing  for  an  industry 
so  new.  With  a  leeway  of  6.3%  it  was  possible  for  the  companies  operat- 
ing these  stations,  considered  as  a  whole,  to  meet  interest  charges  and 
to  make  payments  of  dividends  on  a  substantial  part  of  the  total  capital 
stock. 

If  the  total  gross  income  of  the  stations  now  in  operation  be  estimated 
as  larger  by  80%  than  it  was  in  1907,  and  if  the  cost  of  construction  and 
equipment  also  had  increased  by  the  same  percentage,  the  total  gross 
income  for  1911  would  aggregate  |316,156,208,  and  the  percentage  of  in- 
come would,  of  course,  continue  at  16%.  It  is  most  reasonable  to  believe, 
however,  that  there  has  been  a  larger  percentage  increase  in  income  than 
in  cost  of  construction;  likewise  a  smaller  percentage  increase  in  total 
expenses.  Accordingly,  if  actual  figures  for  1911  were  at  hand  it  would 
no  doubt  be  found  that  both  the  percentage  of  gross  income  and  the 
percentage  of  net  revenue  to  cost  of  construction  and  equipment  would 
now  make  an  even  more  favorable  showing  than  they  did  in  1907. 

The  amount  of  capital  invested  in  central  electric  stations  the  last 
decade  has  run  into  most  impressive  figures.  The  total  outstanding  bonds 
and  stock  of  all  commercial  companies  engaged  in  the  central  electric 
station  industry  (exclusive,  of  course,  of  street  railways,  etc.)  in  1902 
aggregated  1627,515,875.  At  the  present  time  this  capitalization,  partly 
estimated,  totals  |2,415,591,327.  This  is  shown  in  the  following  table: 
Total  Capitalization  of   Commercial  Companies  Only 

*1911                 1902  Amount  Pet. 

Bonds    outstanding $1,081,219,833  $254,563,923  $826,655,910  324.7 

Total   stock   outstanding 1,334,371,494    372,951,952  961,419,542  257.7 

Total  bonds  and  stock  outstanding. .      2,415,591,327    627,515,875  1,788,075,452  284.9 

*Figures  are  partly  estimated,  actual  reports  for  1907  being  the  basis  with  an 
added  80%  increase. 

In  order  to  obtain  satisfactory  comparisons  only  commercial  com- 
panies are  considered  in  the  tables  on  capitalization  which  follow,  showing 
actual  figures  for  1907  and  1902.  The  first  table  shows  the  outstanding 
bonds  and  the  interest  charges  paid. 


Outstanding  Bonds  and  Interest  Charges  of  Commercial  Companies  Only 

Interest 
1907  1902  Amount  Pet. 

Bonds  outstanding   $600,677,685.     $254,563,923.     $346,113,762.       136.0 

Interest  charges 26,842,330.         12,118,740.         14,723,590.       121.5 

Pet.  of  interest  charges  to  funded 
debt  4.47%  4.76%  

The  bonded  debt  for  1907  shown  in  the  above  table  covers  1,129  com- 
panies, that  being  the  number  of  commercial  companies  having  bonds 
outstanding  in  that  year.  Of  these  companies  all  but  51  paid  interest 
on  their  bonded  debt  in  1907.  Those  51  companies  not  paying  interest 
had  outstanding  bonds  amounting  to  only  |9,270,800  out  of  the  total  of 
$600,677,685. 

It  will  be  immediately  realized  that  the  showing  of  the  percentage  of 
interest  charges  to  funded  debt  for  1907  cannot  be  an  absolutely  true 
showing  inasmuch  as  the  majority  of  electric  light  and  power  company 
bonds  bear  interest  at  the  rate  of  at  least  5%.  It  is  well  to  state,  there- 
fore, that  the  amount  shown  as  interest  on  bonds  outstanding  is  not  the 
total  interest  chargeable  for  the  year,  due  to  various  reasons,  notably,  to 
the  fact  that  it  is  customary  practice  to  charge  all  or  a  part  of  the  interest 
to  plant  account  while  construction  of  plant  is  under  way.  The  out- 
standing bonds  in  1907  included,  of  course,  many  bonds  issued  for  the 
construction  of  plants  not  yet  completed. 

The  fact  that  nearly  4i/^%  was  paid  on  total  bonds  outstanding  in  the 
year  1907,  notwithstanding  an  increase  of  136%  in  the  amount  of  bonds 
outstanding,  as  compared  with  1902,  shows  the  general  stability  of  the 
central  station  industry.  This  is  even  more  clearly  emphasized  in  the 
following  table  giving  the  outstanding  capital  stock  and  the  dividends 
paid  : 

Outstanding  Capital  Stock  and  Dividends  Paid  of  Commercial  Companies  Only 

Increase 
1907  1902  Amount         Pet. 

Preferred   stock    outstanding $75,313,725.   $23,871,671.   $51,442,054.    215.5 

Preferred  stock  dividends 2,416,760.  629,496.       1,787,264.    283.9 

Pet.  of  dividends  to  stock 3.21%  2.63%  

Common   stock   outstanding 666,003,772.    349,080,281.    316,923,491.      90.8 

Common  stock  dividends 16,883,812.       5,560,341.     11,323,471.    203.6 

Pet.  of  dividends  to  stock 2.53%  1.59%  

Total   stock   outstanding 741,317,497.   372,951,952.    368,365,545.      98.8 

Total    dividends 19,300,572.       6,189,837.     13,110,735.    211.8 

Pet.  of  total  dividends  to  total  stock 2.60%  1.66%  


22 

It  will  be  noted  that  there  was  a  much  greater  relative  increase  in 
outstanding  preferred  stock  than  in  outstanding  bonds,  the  increase  in 
the  preferred  stock  being  equal  to  215.5%  and  that  in  bonds  136%.  The 
increase  in  common  stock  was  equal  to  90.8%.  This  reflects  the  modem 
tendency  of  financing  a  material  portion  of  the  growth  of  electrical  com- 
panies by  the  issuance  of  preferred  stock  instead  of  by  the  old  and  im- 
practical method  of  providing  for  all  additional  cash  requirements 
through  the  sale  of  bonds. 

It  will  be  noted  that  the  total  dividends  paid  in  1907  were  equal  to 
2.60%  on  the  total  capitalization,  as  compared  with  1.66%  paid  in  1902. 

The  total  outstanding  capitalization — bonds  and  stocks — and  the 
total  interest  and  dividends  paid  in  1907,  with  a  1902  comparison,  are 
shown  in  the  following  table: 

Total  Capitalization,  Interest  Charges  and  Dividends  of  Commercial  Companies  Only 

1907  1902  Amount  Pet. 

Number  of  companies 2,516  2,049  467  22.8 

Bonds  outstanding   $600,677,685.  $254,563,923.  $346,113,762.  136.0 

Total  stock  outstanding 741,317,497.  372,951,952.  368,365,546.  98.8 

Total  bonds  and  stock  out 1,341,995,182.  627,515,875.  714,479,307.  113.8 

Total  interest  and  dividends  paid  46,142,902.  18,308,577.  27,834,325.  152.0 
Pet.  of  total  interest  and  divi- 
dends paid  to  total  capitaliza- 
tion outstanding 3.44%  2.92%  

Of  the  2,516  companies  considered  in  the  above  table  for  the  year  1907 
a  total  of  1,496  paid  either  interest  or  dividends  on  |1,275,469,707  total 
capitalization — bonds  and  stocks — while  1,020  companies  paid  neither 
interest  nor  dividends  on  |66,525,475  total  capitalization. 

It  will  thus  be  noted  that  the  companies  which  failed  to  pay  both 
interest  and  dividends  were  the  smaller  companies,  inasmuch  as  interest 
or  dividends  were  paid  on  95%  of  the  total  amount  of  outstanding  capital- 
ization. It  is  true  that  40%  of  the  companies  failed  to  pay  both  interest 
and  dividends,  but  the  total  capitalization  of  these  companies  amounted 
to  only  5%  of  the  total  capitalization  of  the  2,516  companies.  Dividends 
were  paid  on  59.5%  of  the  total  preferred  stock  outstanding  and  on 
48.3%  of  the  total  common  stock  outstanding.     The  average  rate  of  divi- 


/^ 


' 


23 

dends  paid  on  the  dividend-paying  preferred  stock  was  5.39%,  and  on  the 
dividend-paying  common  stock  was  5.25%. 

These  figures  point  plainly  enough  to  the  security  of  investments  of 
electric  light  and  power  companies.  If  it  were  possible  to  present 
exact  tables  of  capitalization  and  interest  and  dividend  payments  show- 
ing results  for  the  current  year  it  would  be  found,  without  question,  that 
the  electric  light  and  power  business  is  now  on  an  even  stronger  footing 
than  it  was  in  1907.  It  is  a  better  realization  of  these  facts  that  has  been 
responsible  for  the  unusually  excellent  demand  for  electric  company 
securities  the  last  few  years. 

A  recapitulation,  in  small  part,  of  all  the  foregoing  presents  the  fol- 
lowing impressive  statements: 

Beams  of  intense  electric  light  obtained  from  the  voltaic  arc 
by  Faraday  in  1858. 

First  dynamo  electric  machine  patented  by  Gramme  in  1870. 

JablochkofTs  arc  lamp  invented  in  1876. 

Wallace-Farmer  dynamo  at  the  Philadelphia  Centennial  Expo- 
sition in  1876. 

First  commercial  arc  lamp  system  (Brush)  installed  in  1879. 

First  complete  system  of  incandescent  lighting  at  Menlo  Park 
in  1879. 

First  commercial  central  station  for  incandescent  lighting 
began  operation  in  London  in  1882. 

Pearl  Street  Station  of  Edison  Electric  Illuminating  Co.  began 
operation  in  New  York  in  1882. 

"Feeder  and  main"  system  used  in  1883. 

"Three-wire  system"  first  used  in  1883. 

First  regular  alternating  current  station  was  installed  at 
Buffalo  by  George  Westinghouse  in  1886. 

Rotating  field  principle  of  alternating  current  generators,  mak- 
ing possible  the  present  modern  electric  industry,  discovered  in 
1888. 

Number  of  central  electric  stations,  exclusive  of  street  railway 
and  miscellaneous  stations,  in  the  United  States  in  1911  estimated 
at  6,000. 

Cost  of  construction  and  equipment  of  these  stations  estimated 
at  11,975,000,000. 

Horse-power  capacity  of  these  stations  estimated  at  7,259,000. 

Kilowatt  capacity  of  these  stations  estimated  at  4,877,000. 

Output  of  these  stations  in  1911  estimated  at  10,552,000,000 
kilowatt  hours. 


u 


Number  of  incandescent  lamps  that  will  be  manufactured  in 
1911  estimated  at  90,000,000. 

Estimated  gross  income  of  stations  in  1911  estimated  at 
1316,156,208. 

Percentage  of  gross  income  to  cost  of  construction  and  equip- 
ment, for  4,714  stations,  in  1907  was  16%,  that  is,  the  investment 
of  six  dollars  in  plant  account  was  necessary  for  every  dollar  of 
gross  income  received. 

Percentage  of  net  operating  revenue  to  cost  of  construction  and 
equipment,  for  4,714  stations,  in  1907  w^as  6.3%. 

Total  bonds  and  stock  of  commercial  companies  in  1911  esti- 
mated at  12,415,591,327. 

Total  bonds  outstanding  of  commercial  companies  in  1907  was 
1600,677,685. 

Percentage  of  interest  charges  on  these  bonds  in  1907  was 
4.47%o. 

Total  preferred  stock  outstanding  of  commerial  companies  in 
1907  was  $75,313,725. 

Percentage  of  dividends  paid  on  this  preferred  stock  in  1907 
was  3.21%. 

Total  common  stock  outstanding  of  commercial  companies  in 
1907  was  1666,003,772. 

Percentage  of  dividends  paid  on  this  common  stock  was  2.53%. 

Total  outstanding  bonds  and  stock  of  2,516  commercial  com- 
panies in  1907  was  |1,341,995,182. 

Percentage  of  total  interest  and  dividends  paid  on  this  capital- 
ization in  1907  was  3.42%?. 

Preferred  dividends  were  paid  in  1907  on  59.5%  of  the  total 
preferred  stock. 

Common  dividends  were  paid  in  1907  on  48.3%  of  the  total 
common  stock. 


These  are  the  facts  that  demonstrate  the  vast  influence  the  electric 
light  and  power  industry  has  had  upon  the  country's  industrial  growth 
the  last  quarter  of  a  century — a  period  of  time  in  which  there  has  been 
by  far  the  greatest  material  progress  ever  witnessed  in  any  country. 
These  facts  also  indicate  the  wonderful  growth  in  the  industry  that  is  to 
take  place  in  the  years  to  come. 

It  is  not  too  much  to  expect  that  in  the  future  the  securities  of  electric 
companies  will  occupy  first  place,  both  as  to  volume  and  stability,  among 
investments  of  all  classes.  The  electric  age  is  with  us  and  will  steadily 
become  more  pronounced  with  the  years.  The  securities  of  the  companies 
engaged  in  the  great  work  afford  most  attractive  investment  possibilities. 


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